Market Segmentation, Target Market, And Positioning Strategy For Woolworths

Market Segmentation

Discuss about the importance of target marketing and its importance in the growth of a business.

Woolworths Limited is among the largest leading companies that operate in the retail sector. It is the most popular supermarket chain that focuses on quality, value, style innovation, integrity and services. The Woolworths store is located in Glen Waverly and the potential target customers are higher income families. This Australian Supermarket is in its growth stage of the product life cycle. The supermarket should also evaluate effective strategy to maintain its leadership position in the market.

 The people living here are mostly older couples and families besides young and independent people. Individuals living here are highly educated and enjoy lavish lifestyle. Therefore, the report will disclose the potential customers of Woolworths through the S-T-P approach or Segmentation-Targeting-Positioning approach. This will help in providing the proper framework that would be required for marketing planning objectives.  

Discussion

Segmentation is the process through which the potential market or the consumers are divided into different segments and parts (Sultan, Wong & Sigala, 2018). Generally, it consists of potential and existing customers into different segments or sub-groups of the customers. These are accessible, profitable actionable and definable in nature. An organization would find it quite impossible to target the overall market because of the cot, time and effort restrictions. Segmentation is highly significant in the present market condition with variety of products, ad-fatigue and media proliferation recently increasing all around the globe (Scrinis, Parker & Carey, 2017). If segmentation of the business market is correctly done then it would make a great difference between the shut down and successes of the organization. Segmentation also allows the producer to tailor its products and services according to the wants, desires and needs of the people. This further allows the seller to lay more focus on money, resources, effort and time on a profitable market.

The main aim of segmenting the market is to identify the common characteristics within the individuals such as similar lifestyle, common interest, and even same demographics profiles. Through market segmentation it is assumed that various market segments needs different programs for marketing. Different kind of offers, promotion, prices, distribution or combination of the marketing variables is required.

Segmentation helps in ascertaining the market that is to be segmented (Rundle-Thiele, Dietrich & Kubacki, 2017). Through proper identification, selection and application the overall bases, segmentation can be utilized. There are four major variables that are used in segmenting the market are as follows:

Target Market

Demographic segmentation: the consumers are mainly segmented according to their age, gender, education, income, family size and socio economic status. The segmentation is done as per the quantifiable characteristics of the overall population. Woolworth’s consumers in the Glen Waverly area are people from all age group, from young to old (Culley et al., 2017). The retail supermarket chain deals in all kind of products and services for their consumers. The segment groups are of mostly between upper to middle class people. The segmentation on the basis of demographics is highly popular as it creates the selling point of various market segments, which makes the marketing of Woolworths more powerful.

Families purchasing the products come in all shapes and sizes, which include couples, singles, kids and young people.  The income group is from medium to high class people. For marketing luxurious goods of Woolworths, the target markets are generally the individuals with high disposable income.  

Geographic segmentation: The consumers are also segmented according to their geographic locations. The residents of Glen Waverly are mostly middle to high class people and the size of community is quite large. The urban citizens are often informed about any discount in the stores trough newspaper advertisement to attract and retain large number of customers. Certain foods also have specific geographical interest in Australia. Seafood is marketed highly more in the western parts of Glen Waverly region and its supply is also very fresh throughout the year. Woolworths uses geographical segmentation method to target the new regions or territories. The company uses coupons and discount technique to expand its target market in the nearby regions.

Psychographic segmentation: the business market is also divided as per the behavior, attitudes, personality and lifestyle of the consumers (Chhetri et al., 2017). The consumer in the region lives a lavish lifestyle and spends huge money on recreational facilities and shopping. The buying power of the Woolworths customers are high and the people always tries to maintain their social class. Older couples and families contribute around 19.5% of the population in the area. Independent youth in the area are also present but the majority part of the groups re established couples and families. Each of the individuals has different cultural values and attitudes that affect their purchasing pattern. An individual with rich personality has high taste and buying power to maintain such lifestyle. Therefore, Woolworths target it potential customers as per the brands.

Positioning

Behavioral segmentation: the segmentation in the market is usually done through consumption, purchasing or usage behavior. The customers buying pattern depends on various factors. This includes needs, usage occasion, and buyer readiness (Beneke & Trappler, 2015).  The customers are primarily divided in the form of buying on occasions. Products such as premium foods and high quality chocolates are purchased mostly during the times of festivals. Moreover, the business gains maximum growth by attracting new customers and retaining the existing customers. Customer’s loyalty is vital for behavioral segmentation. In addition to this, markets are further sub divided in the form of their usage and application.

Advantages

With the help of market segmentation, the marketers can easily spot and compare the available marketing opportunities. It is important to examine each and every needs of the segment and determine the extent that will satisfy the needs of the consumers. The Company Woolworths will be able to modify the products and service as well as marketing appeals to suit the target segment of the customers

Woolworths can easily identify the latest profitable segments that require immediate attention. Moreover, appropriate packages can be easily developed for each of the market segments. This helps in further sub-dividing the total aggregate demands of the products into economically viable segments. The major benefits are as follows:

• Proper selection of target market: Consumer’s character differs a lot and so is their buying behavior. Segmentation helps the firm to set a realistic targets and priorities for the organization (Sebri & Zaccour, 2017).
• Tapping specific market: Market segmentation helps in overcoming the overall competition by effectively using the existing resources (Trappler, 2015). This help in easily developing an adequate marketing program that enables the marketer to perform their task more effectively.
• Economic and efficient marketing efforts: segmentation creates the marketing efforts to be both economic and effective in nature. Through segmentation the marketers can easily evaluate the result of the marketing programs. The best time to launch products or to advertize can be easily determined. Segmentation not only provides maximum benefits to the organization but also the customers.

Disadvantages

Small Segments Market segmentation more often is an expensive proposition. The promotional expenses as well as costs of maintaining the adequate inventory for each variety of goods would lead to erode profitability. As the marketers has to implement various programs for marketing programs that suits the different segments and thus increases the administrative expenses.

• Segmentation increases costs: when a firm operates to serve all the market segments, this creates proliferation of products. The cost of production for Woolworths increases because of the shorter production runs and products variants.
• Proper Study: It is necessary to maintain larger inventory by the firm by both the distributors and the manufacturers (Wang, 2015). When the characteristics of the present market segment changes then the investment that is made also becomes useless.
• Dependence: Segmentation increases the businesses dependence on the group of consumers. The organization has to be highly dependent on the group and their purchasing power (Chhetri et al, 2017).

Target market

Target market is referred to the group of potential consumers or the organization that is most likely to purchase the products and services of the company. An organization invests it significant amount of capital and time to monitors it target market (Andaleeb, 2016). The target market of an organization is divided by income, age, lifestyle and location of the customers. The target market of the company is defined by the people, who are most likely to have a want for its product (Urde & Koch, 2014). The target market is the major focus of the marketing plan. It determines the relevant factors for the product, like price, distribution and promotion efforts.

The major target markets of Woolworths are upper middle class and higher income groups. As the sale of the organization grows, it further leads to expand the target market at an international level. This facilitates the firm to reach vast subset of its target market in various parts of the world.  The increasing target market is the main reason for the organization to monitor customer preferences and sales.

Conclusion

Primary markets

High to middle income group people are the main target market of Woolworths. Australia is a developed country and the standard of living for people is high (Khedher, 2014). The Government also provides adequate support to its people by residing in the country. The economic scenario of the nation is favorable enough for the growth and success of the supermarket. The products that area sold at Woolworths are mostly for the higher section of the society. The standard of living of the people of Australia is very high and also the population’s disposable income is also very high. Woolworths in the recent times has been able to achieve maximum profit because of the high purchasing of its customers.

The main target market is the high income earner as the living standards of the consumers has to bear the increased cost for the products of Woolworths. The company aims towards the social development of the people within the country. Woolworths sells its products to varieties of customers. The main strategy of the organization is to increase its market share in the future.

Secondary markets

The secondary market is the people from all age group. Woolworths believes it to be important to sell its products to all age groups to gain competitive advantage. In Australia, majority of people purchase the products from supermarket. Woolworths is a major supermarket choice for the people living in Glen Waverly. The target market aims in attracting the people of all age group. The company approaches the target market through mass customization of the products (Haskelberg et al., 2016). It is also important for the company to improve its customer relationship by using effective marketing strategy.

Consumer profile

Segmentation tool	Details of Customer Profile Jade Petrakis
Geographic	Glen Waverly
Demographics	Jade is an Australia and work as a marketing manager in a successful enterprise. She has her own house and earns an average income of around $80,000 per year. She is married and her total household income before tax is $ 200,000 per year. She is 26 years old and has no children yet. Moreover she holds a bachelor degree in Marketing and pursuing her Masters. She is a high income customer.
Behavioral	Jade enjoys shopping and always tries to do new things. She also likes to make a lot of friends and be the part of their group. She is brand loyal and limits her buying behavior. She puts a lot of effort while buying a particular product.
Psychographics	Jade is socially active or socially aware in nature (Culley et al., 2017). It refers to group of individuals who are community minded. She focuses more on learning and innovation. She is a must reader of magazines and newspaper that does not contain information in the mainstream media.

Positioning helps in distinguishing a particular brand from its competitors and holds a unique place in the mind of the customer’s (Aghdaie & Alimardani, 2015). Companies should emphasizes distinguishes characteristics of the brands and position its products. It is one of the very powerful concepts of marketing. In positioning, the organization creates a product image that is developed through price, place, promotion and products.

Proper positioning strategy helps in increasing the marketing efforts and helps the buyer to acknowledge the product or services and finally purchase it (Patti et al., 2017). Therefore, positioning is an overall strategy, which aims to create a distinct position of the brand in comparison to its competitors. Positioning can be done within a category, according to product category or benefits.

Perceptual map

Woolworths target markets are mostly higher and upper middle class households. The organization gains competitive advantage in the market due to its strong brand name and effective marketing strategy (Neirotti, Raguseo & Paolucci, 2016). The major competitors of Woolworths are Walmart, TESCO and ALDI. Woolworths has a high competitive advantage as premium products of high quality is sold at a premium price. Australia is a developed economy and people mostly prefer premium products over low quality products. The high income earners can easily afford to pay for the high quality products. Therefore, Woolworth’s holds a better position in the market.

The competition is intense as Walmart also deals with high quality products at high prices. International organizations are also a major threat to the company. Woolworths had sustained its competitive advantage by the promoting the brand through promotions, advertizing and sponsorship.

Positioning Statement

‘For High income earners and their families, Woolworths is a premium supermarket chain that provides premium products and has a strong brand image’.

Woolworths has achieved a significant position within the retail industry in Australia. The company has effective operational growth strategies, which leads to its success in the competitive market (Singal & Jain, 2014). The vital strategic priorities of Woolworths include expanding its leadership within all its market segments and maintaining its target market by satisfying the people with its premium quality products. Through proper market segmentation and positioning, Woolworths is able to achieve better customer satisfaction.  Woolworths has proved to be a market leader due to its strong brand image. Its leadership position in the market further enhances the company’s ability to exploit the potential in the market and thus dominating the retail market in Australia.

Conclusion

Woolworth’s market segmentation has been carried to assess its target market in Glen Waverly region of Australia. Woolworths primary target markets are the upper middle class families and the secondary target customers are the middle class people. The company sell quality products and at high prices to its target customers. It is important to improve the customer service efficiency through innovation and technology development. The main objective of the company is to strengthen its market position. Moreover, the company needs to expand the overseas market through proper analysis of its segmenting and its target market. With the help of perpetual map, the marketing positioning of Woolworths in Glen Waverly is obtained. Woolworths with its brand image and product quality has been able to attract and retain its target customers.

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